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Common misconceptions about your insurance coverage
Major losses are hard enough to weather on their own. The last thing you need is the additional pain that comes from learning your coverage does not actually cover what you need it to. Further compounded by the fact that each policy is unique, and carriers have different options and requirements making it difficult to navigate the complexity of your personal insurance program. Which is why we are extremely careful to detail the particulars of all your coverages during our traditional client onboarding process and subsequent renewal conversations. The last thing we would ever want is for you to think something is covered when it’s not. This is one reason why we urge clients to call their insurance professional with any questions and schedule annual reviews. To further ensure that you are never caught off guard, here is a brief overview of the coverage areas we have found to be the basis of the most common misconceptions. HOME COVERAGE Assumption: Mold is covered after water loss.The reality: Typical policies provide only minimal compensation for mold damage.Unfortunately, coverage for mold damage is complicated. All homeowners policies exclude mold coverage; however, if mold damage is present after a previously covered water loss, you may only receive a nominal reimbursement. It is possible to purchase additional coverage, an option we regularly discuss with clients. If you are not sure about your limits, and this is a concern, we recommend confirming with your account executive. Assumption: Flood insurance covers all water-related losses.The reality: Floods caused by rising surface waters require a special policy.Flood insurance in this country is in flux, with the federal program that oversees it raising rates in an attempt to strengthen its financial viability. In any case, government-backed flood insurance maxes out at $250,000 for the house itself and $100,000 for what is inside. That said, you may be eligible for a private excess flood policy that covers additional losses. That’s important because flood damage that results from rising surface waters is generally an excluded peril in homeowner’s policies. However, your broker can determine if you are eligible to purchase private flood coverage that’s designed for this scenario. Assumption: Landscaping on the property is covered.The reality: Generally, only if it causes damage to any structure.If a tree falls on your residence and causes significant damage to your home, you likely will be covered. However, if a storm results in fallen trees around your property but does not cause damage to your home, you will likely have very minimal coverage. It should be noted that some carriers may offer a nominal reimbursement in these instances. Another reason to speak with your insurance broker. Assumption: Hardscaping and other structures on the property are generally covered.The reality: Most policies offer limited protection for any structures that are not attached to the main dwelling.Non-primary structures—for example, a freestanding garage, pool, pool house, natural-stone patio, or pergola—typically fall under “Other Structures.” The coverage limit is usually set as a percentage of the dwelling value on the homeowners policy. Adding more coverage is sometimes tricky, as some policies don’t allow you to amend the limit while others will only increase it with an endorsement for an additional premium. It’s best to confirm with your broker that any other structures on your property have sufficient coverage. COLLECTIBLES COVERAGE Assumption: Jewelry, fine art, wine and the like are fully protected by homeowners policies.The reality: Homeowners policies offer only limited coverage for such items.Most homeowners policies do not cover the mysterious disappearance of a bracelet, but most jewelry policies do. Similarly, homeowners policies will only cover the spoilage of wine up to a certain minimal amount, but not the full value, while many wine policies do. If you have a valuable collection of any kind, we recommend a separate policy that adequately covers a full array of potential perils and offers sufficient compensation. Assumption: Your collectible car is fully covered by any automobile policy.The reality: To ensure full coverage, you and your carrier have to agree on a car’s value.Traditional automobile insurance bases the value of a vehicle solely on its VIN number. Therefore, if a collector has a 1992 Bronco and completed extensive restorations, this would increase both the car value and demand. That valuation needs to be reflected in your policy and may require an additional collectible car policy to cover the increased value. Always keep all the documentation necessary to prove the cost of the restoration and update the agreed-upon value following any customizations. Assumption: Your collectibles policy covers the current value of your collectibles.The reality: You must regularly reappraise collectibles.Collectible policies reimburse the listed value of a piece when the coverage was purchased, adjusted for inflation, and some may include an additional amount, albeit limited, for market value appreciation. Of course, the value of collectibles often increases significantly over time. That makes appraisals necessary every two to three years to ensure your coverage is always up to date. GENERAL COVERAGE Assumption: Identity theft policies cover losses from thefts committed under your name.The reality: Most policies compensate only for expenses associated with restoring your identity.If, for example, someone takes out a $40,000 car loan using your personal information, identity theft coverage will reimburse you for the time it takes to negotiate with the loan company but not the loan itself. Therefore, speak with your insurance advisor about adding a personal cyber policy to your program to help alleviate some of the financial impact. Assumption: Excess liability coverage covers everything you own.The reality: Only listed items are covered.We always advocate for consolidating coverage with one broker, because it is the best way to make sure all your possessions are covered by a single excess liability policy. More than one broker makes it too easy for important items to fall through the cracks. And you do not want a vehicle or watercraft left uncovered should you be sued for an incident in which it is involved. (Note: excess liability never extends to personal aircraft.) Once again, while the above outlines the most common areas for misconceptions around personal insurance, every client’s personal insurance portfolio is unique. If you are concerned about any of the areas, we hope that you reach out to your insurance advisor to definitively confirm your coverage. You’ve worked hard to build what you have; we can help you make sure that it is as well protected as it can possibly be. ...
Read in 6 minutesDemystifying the claims process
As insurance professionals, we have a front-row view of life’s precariousness, witnessing again and again how things can change in an instant. A client arrives home from a celebratory dinner to find a flood caused by a burst pipe has damaged her art collection. A leisurely ride downtown totals the classic car as an uninsured motorist runs a stop sign. Or an uncontrollable wildfire razes the family’s summer compound. Having witnessed such misfortunes and the rebuilding—of the homes, collections, and lives—that follows, we have learned that an experienced advisor by your side during carrier negotiations can minimize added stress during the claims process. That is why we dedicate tremendous resources to our claims advocacy responsibilities. When the worst happens, you deserve to have experts at your side to guide you all the way to a finalized settlement. We also know that the more familiar you are with the process beforehand, the better things are likely to go should you need to make a claim. To that end, this piece highlights all you can expect when filing a claim and what you can do to help ensure the experience is a smooth one. What to do in the immediate aftermath of a loss (or if trouble is imminent): A lot of emotional but crucial decisions will need to be made when calamity arises, but how you act in the moment can have a great impact on how your ensuing claim plays out. Setting a course of action beforehand will help get you to a best-case outcome. Here are some things to keep in mind. Before you do anything else, make sure everyone is safe. When a dangerous event is on its way, your first concern, of course, is getting family members and any employees to a secure location. Only then should you consider going back to collect whatever possessions you can. Similarly, in the immediate aftermath of an incident, take stock of everyone’s well-being before making any other moves. Stay ahead of the situation. As soon as you know that a damaging event is working its way towards you, contact your account executive so they can begin a claim, just in case. Inevitably, resources are scarce after such events, so you want to be first in line with carriers, adjusters, and contractors once the trouble clears. If your property emerges without any significant damage, we can help you close out the claim. Your first insurance-related call should be to your advisor, not the carrier. You’ll notice in the item above that we suggest you contact your account executive to begin a claim. That’s because our specialists have countless experience navigating situations of all kinds. For starters, they can peruse your loss history and assess the extent of the damage to determine if filing a claim is even in your best interest. If it is, they will keep the process on track, including filing expeditiously. They know carriers need to be given the best chance to determine the cause of a loss, and if you wait too long and the cause is no longer determinable—for instance, if repairs have been made—you may be denied restitution. Most important, what is said in and around the filing of a claim can alter what a carrier will cover. You can count on your team to position losses to your advantage. Always work to mitigate further damage. After the initial loss or crisis, most policies require you to do whatever can reasonably be done to minimize the damage from getting worse. Your advisors will be happy to put you in contact with the companies that dry out wet walls, patch roofs or temporarily fix burst pipes so that mold doesn’t grow, or the water damage doesn’t spread to other areas. It’s important not to throw things away. It’s perfectly understandable to want to begin cleanup efforts right away, but you need to fight the impulse. Every damaged item has to be inventoried and documented by the insurance adjustor. Any property that has been discarded will not be covered. What to do once a claim has been filed: The good news is that the claims process can yield satisfying results in as few as 10 days (for, say, a lost piece of jewelry). On the other hand, you might have to wait a bit longer—six months or more—if you are waiting to be compensated for major property damage even longer still if a liability suit is involved. Whatever the case, here are some steps you can take to keep forward progress: Prepare for the adjustor’s inspection. As the named insured, you will be the one speaking with the carrier’s representatives throughout the process. Again, what you do and don’t say has the potential to affect the resolution, so keep responses simple and direct. Most of all, avoid volunteering information. For example, if there is a case of water damage, suggesting seepage in the foundation may move your claim to a denial. Better to say you aren’t sure where the water is from and leave it at that. Get estimates for repairs. You will need to provide a quote from a contractor, repair shop, or whoever will be fixing the damage you have reported. (Alliant’s claims team can provide recommendations for such vendors and review their quotes and backup documentation.) If this is too much for you to tackle amid the post-event chaos, there are vendors who oversee quote-collections and rebuilds for a percentage of the reimbursement. Likewise, there are those who can inventory the damage for you. Be ready to negotiate. Once all documentation and estimates have been gathered, a carrier will offer a reimbursement figure. Your claims team will be invaluable here too, helping to reconcile the inevitable gap between the actual cost and proposed payout, giving you the best chance to recover an appropriate amount. Make sure the check is made out to the right person. Carriers are legally obliged to issue settlement checks to the named insured, and that can be confusing when that entity is in fact a family or LLC without a bank account. (We suggest that you look into this now with your account executive, and make any changes, so you won’t have to deal with this issue at the same time that you are dealing with losses.) It is worth noting that when a loan is involved, the carrier must also be listed on the check, and this often gets tricky, as every bank has its own fund-releasing procedure. One workaround is to ask the carrier to write the check directly to the vendor. As mentioned above, it is important to keep in mind that filing a claim is not always the right move, and that fact is truer than ever in today’s difficult market. In fact, we offer this piece of advice: pay out of pocket for any amount that will not cause you significant financial stress and save claims only for catastrophic losses. We recognize that this may sound like counterintuitive guidance, given that you pay good money for your coverage. Unfortunately, accruing too many claims can result in nonrenewals and higher premiums, and both of those outcomes will ultimately cost you more. Hopefully, you will never need to make these difficult calculations or file any claims. Should you need to do so, though, we believe that your coverage is only as good as the claims experience it prompts, and we will do everything in our power to make it as seamless and positive as we can. ...
Read in 7 minutesHow to avoid charity scams
The American Cancer Society of Michigan and the United Way of Ohio certainly sound like legitimate charities, and their tax-exempt status with the IRS further supports that impression. Yet, they are two of 76 fake charities concocted by a convicted stock market scammer, who needed only a post office box to collect more than $150,000 from well-meaning yet ill-informed donors. Unfortunately, he is no aberration. The FBI has reported that charity scams flourished during the pandemic, and, in general, thieves are increasingly taking advantage of the humanitarian crisis to funnel contributions of concerned citizens into their own pockets. Many of our clients are significant donors that would be rightly dismayed to learn that their philanthropy might not make it to those it is meant for. With giving season fast approaching, we thought this a good time to offer the following tips to help you protect your charitable efforts from being misused. 1. Familiarize yourself with scam tactics. Though methods have become quite sophisticated and subtle, the underlying principles remain mostly unchanged. Some of those are: Mimicking authentic causes: Fraudsters often steal the names of sanctioned organizations or tweak them only slightly. They even copy official logos and website looks. In many cases, the only significant difference is a URL that is close to but not exactly that of the real charity Applying pressure: Scammers reach out by phone, email, or social media channels, pretending to represent legitimate causes. Be wary of a particularly hard sell or a request for donations by wire or gift card. Capitalizing on a crisis: After disaster—natural or otherwise—strikes, con artists quickly set up fake crowdfunding sites or send phony solicitations via text or email. Always check before donating to one of these requests to see if the contact number veers from an officially listed one for a legitimate organization (usually it is off by a single digit) or if parts of the charity’s name are misspelled (for example, “Hurricane” is missing an “e”). 2. Conduct thorough vetting. Before making a substantial donation, we suggest taking some steps to further confirm the legitimacy of the charitable organization. These might include: Reviewing the organization’s website. Checking in with sanctioning online databases, such as CharityNavigator, GuideStar, or even the Better Business Bureau. The IRS has a list too, but as noted above, fake charities can make their way onto it. Perusing the board member names and bios to get an idea of who supports the group. Looking for acquaintances in your network who might know about either the organization itself or someone involved with it. Meeting with someone inside the organization, through a mutual connection or by reaching out directly. For starters, the professional development department of any legitimate organization should be more than willing to chat with a potential high–dollar donor. 3. Practice safe giving. It’s extremely hard to recover money once it has been given away, so it’s worth doing everything you can to avoid being defrauded. To that end: Seek transparency. Legitimate organizations will provide you with extensive information about their programs and spending. Additionally, they will always grant the time for you to do your due diligence. Never donate under pressure. Don’t rely on reputation alone. Some of the best-known organizations receive poor ratings regarding their use of funds, spending too much on operational costs and marketing efforts. Recognize the potential risk. No one ever wants to be taken advantage of, but not everyone has the time to properly investigate every potential recipient, either. If you are compelled to donate to an unvetted fundraiser, give an amount you wouldn’t be too upset to lose. Listen to your financial advisor. They might be able to connect you with people in the relevant charities or, at the very least, make sure the funds get to the correct recipient. Be extra cautious when giving to international entities. There have been many instances of overseas organizations hiding behind nonprofit designations to issue bribes or commit other corrupt practices. When foreign officials or their family members are listed as board members, it can be a red flag. Insurance solutions for recovering donations to fraudulent organizations are quite limited. Since fraud coverage varies significantly for each individual, it is important to check with your insurance professional to determine what your program includes. While one recourse is to litigate the fraud in court, that can be costly — not to mention time-consuming — making it only worth the effort if the loss is a major one. All of these challenges are why we strongly urge you to practice safe giving so you can sidestep fraudulent charities in the first place. If you have concerns about your fraud coverage or would like additional information about how to avoid charity scams, we are here to help. ...
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